Ann: DRA Announces Changes to its Board of Directors, page-3

@PabloB,

True; incredibly cheap at face value.

But be aware that there are contingent liabilities that are potentially at least as big as the current market cap of the company, if not double it. The big one is the MACH Energy litigation:


At the time of the issue of DRA's listing Prospectus, more than two years ago, the MACH Energy ambit claim against DRA was $278m).

But even if you brought all those claims fully to book, and you capitalised the stock's EBIT on a LYL-type valuation multiple (about 80% of DRA's EBIT exc. corporate overheads is of a similar business nature to LYL) you'd still be left with a valuation equal to the current market value.

(Also, one needs to be cogniscant of the things called - somewhat ironically - Upside Performance Rights (UPRs) ... there are 25m of them which expire on 31 December 2023. Fortunately, with a strike price of $3.10, they are deeply out-of-the-money but I think there are some people who are not familiar with the exercise terms and have formed the view that dilution will be occurring.)

But as for the dramatic boardroom developments, that obviously portends something significant, but what that is, escapes me.

But I doubt it is a takeover in the making.
Who would pay a control premium to takeover this company when there is still an indeterminate amount of clean-up work to be done following all the shareholder value that was torched by the previous managers (including the former CEO who presided over much of the carnage and who then had the gall to sue to company)?

.